Hungary nears €10.4 billion EU payout

Péter Magyar travels to Brussels this week to sign a political agreement unlocking up to €10.4 billion in frozen EU funds for Hungary. The Commission frames the deal as a reward for democratic renewal after Viktor Orbán's 16-year rule. A pending case at the EU's top court could declare that this approach — releasing money based on political promises rather than verified reforms — violates EU law.

The pattern is documented. In February 2024, the Commission unfroze funds for Poland after Donald Tusk's election, accepting reform commitments before implementation. Poland has since drawn down 62.4% of its recovery plan, yet none of the promised judicial reforms have entered into force. Hungary is next.

The Court Case That Could Break the Cycle

In Case C-225/24, the European Parliament is suing the Commission over its December 2023 decision to release €10.2 billion in cohesion funds (the EU's infrastructure and development money) to Hungary. Advocate General Tamara Ćapeta recommended annulment in February 2026, identifying four specific assessment failures: reforms that hadn't entered into force, legislation that undermined their stated purpose, and a failure to verify actual implementation.

Ćapeta's sharpest point was procedural. She argued EU judges should conduct full review of these decisions, not merely check for obvious errors. If the CJEU (the EU's highest court) follows her reasoning, every future fund-release decision becomes reviewable on its merits. The Commission would need to prove reforms are "in place and being applied," not merely enacted.

The Court has not yet ruled. The Commission is negotiating a new release while its previous one faces annulment.

A Fiscal Trap With a Hard Deadline

Magyar's room for manoeuvre is narrow. Hungary's budget deficit hit 3,850 billion forints by end-April, consuming 91% of the annual target in four months, driven largely by roughly 1,450 billion forints in missing EU revenue. The RRF (Recovery and Resilience Facility, the EU's post-COVID recovery fund) deadline falls on 31 August 2026. Miss it, and the money expires.

Magyar has publicly rejected two of Brussels' core demands: phasing out windfall taxes on banks and energy companies, and restructuring the pension system. He argues Hungary's fiscal crisis makes both impossible.

The workaround taking shape is a capital injection into Hungary's state development bank (MFB). Budapest would channel EU money through the bank, count it as disbursed before August, and let the bank distribute it over years. The Commission sent a senior delegation to Budapest in mid-May to assess the scheme (Euronews, Portfolio), but worries it will lose oversight of how the money is spent.

The Guardians Who Stepped Aside

The coalition that was supposed to enforce strict conditions has effectively dissolved. Germany's foreign minister now advocates abolishing unanimity voting rather than tightening conditionality. Austria's chancellor received Magyar with military honours on 21 May, signalling partnership over enforcement. Finland's prime minister insisted the rule of law "is not a bargaining chip", but no Finnish blocking action in the Council has followed.

The "strict six" (Sweden, Austria, Germany, Finland, the Netherlands, Estonia) lack the population share to form a blocking minority under qualified majority voting (where big countries carry more weight and no single country can block alone). For the RRF, the Commission decides alone, without a Council vote. The guardians have influence but no veto.

The 85% Salvage Job

Hungary has disbursed just 9% of its RRF allocation, the lowest rate in the EU. Even optimistic Commission estimates suggest only 80–85% of the total can be rescued before the deadline.

The CJEU ruling in C-225/24 will determine whether the Commission can keep treating a change in government as a substitute for verified reform. If the Court follows Ćapeta, the rules for withholding EU money transform from a political instrument into a legal obligation — binding every future decision to release or withhold funds.